Productivity and the Role of Complementary Assets in Firms’ Demand for Technology Innovations

34 Pages Posted: 1 Dec 2008 Last revised: 29 Oct 2015

See all articles by Marco Ceccagnoli

Marco Ceccagnoli

Scheller College of Business at Georgia Tech

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business

Matthew John Higgins

University of Utah - Department of Entrepreneurship & Strategy; National Bureau of Economic Research (NBER); Max Planck Institute for Innovation and Competition

Jeongsik Lee

Drexel University - LeBow College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 30, 2009

Abstract

This paper uses data on transactions in the pharmaceutical industry to examine the demand-side of technology outsourcing. By integrating a transaction-cost economics perspective with the analysis of internal R&D capabilities, we find that firms with relatively more cospecialized complementary assets or relatively strong internal R&D productivity have a lower propensity to source a technology from outside the firm. We show, however, that since downstream capabilities and internal R&D are complementary activities in the presence of asset specificity and transaction costs, a decrease in internal R&D productivity reduces the marginal vale of the downstream assets within firm boundaries, thus stimulating the demand for external technology.

Keywords: Markets for Technology, Innovation, Productivity, Cospecialized Complementary Assets, Pharmaceutical Industry

JEL Classification: L22, G34, L65, O32, O34

Suggested Citation

Ceccagnoli, Marco and Graham, Stuart J.H. and Higgins, Matthew John and Lee, Jeongsik, Productivity and the Role of Complementary Assets in Firms’ Demand for Technology Innovations (September 30, 2009). Available at SSRN: https://ssrn.com/abstract=1309262 or http://dx.doi.org/10.2139/ssrn.1309262

Marco Ceccagnoli (Contact Author)

Scheller College of Business at Georgia Tech ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St. NW
Atlanta, GA 30308
United States
404-385-0953 (Phone)
404-894-6030 (Fax)

HOME PAGE: http://https://www.scheller.gatech.edu/graham

Matthew John Higgins

University of Utah - Department of Entrepreneurship & Strategy ( email )

1655 East Campus Center Dr.
Salt Lake City, UT 84112
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Max Planck Institute for Innovation and Competition ( email )

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Munich, Bayern 80539
Germany

Jeongsik Lee

Drexel University - LeBow College of Business ( email )

3141 Chestnut Street
Philadelphia, PA 19104
United States

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